Jash Engineering Limited (JASH) Earnings Call Transcript

Good afternoon, everyone. I'm Siddesh Chawan from Ernst & Young Investor Relations, and I would like to welcome you the Jash Engineering Q2 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. The recording will be made available on the website within a day, and the transcript of the call shall be made available subsequently. To take us through the results and answer your questions today, we have the top management of Jash Engineering Limited, represented by Mr. Pratik Patel, Chairman and Managing Director; Dharmendra Jain, Chief Financial Officer; and the Jash's entire team. Now I would like to draw your attention to the safe harbor related to today's earnings call. Comments made during the call may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with our business risks that could cause future result performance or achievements to differ significantly from what is expressed or implied by such forward-looking statements. After the end of this call, if you need any further information or clarifications, please do get in touch with me. With that said, I will now hand over the call to Mr. Pratik Patel. Over to you, sir.

Good afternoon, everyone. I'm thankful to you to spare your valuable time and attend this call. We would like to present the results for the first half of this financial year, and we'll directly go on to the presentation, which we have prepared for this. The results were posted yesterday, and I think all of you must have gone through the same on the NSE or BSE website. As you can see, we have achieved a growth of around 12% on the [Technical Difficulty]. However, on the bottom line, the performance has not been as good, and the reason for that is mainly because of the tariff. We have not been able to dispatch materials to U.S. where margins are generally higher compared to domestic sales. Also, there has been some projects where we had stressed low margins, especially screw generator project because of design issues. And at the same time, the employee cost has gone up in India as well as in U.S. because the turnover has not increased, the employee cost as a percentage has gone up a lot, and that is hurting us in the H1. In the beginning of the year, we had projected a revenue of around INR 860 crores. And at that point of time, we were quite hopeful, however, of achieving it. However, we now feel that we may have to lower down the expectation based on what we are currently seeing in the market. There is a lot of unease due to the tariff in many countries, not only India and many countries. And so things have slowed down in many countries. We have equipment worth INR 10 crores nearly ready for last 5 months for Vietnam, but it's not leaving because Vietnam is not taking World Bank loan and they are facing some problems, et cetera, et cetera. So things like these are happening everywhere as a result of which we feel even though we have orders in hand, it may not be possible to deliver within this financial year. However, what I would like to mention here is that in the second half of the year, we will see considerable improvement in the bottom line figures. The reason for that optimism comes from that in the first half, we have achieved only INR 293 crores in revenue. In the second half, we are expecting to achieve INR 530 crores, which is like 1.8x of what we have achieved in the first half. That means that the fixed cost being same, we would have a lot of spillover towards the bottom line in the second half of the year. And so we still expect bottom line to be quite good. It would not be as good as what we had expected pre-tariff. However, it will still be in the range of INR 75 crores to INR 80 crores, INR 85 crores. And I think we will still post relatively good results. Next, this is our 52nd year. And we believe that what is happening today that is as a result of tariff is just a blight. This is something which will overcome. The tariffs hurts only because we have orders in hand before the tariffs were implemented. So since then we have been costing our products to include tariff so that tariff does not hurt us in the new orders. But on the old orders, there is nothing that we can do. Whatever small modifications, adjustment in the orders we can do, we have done, but that's not going to help us because the extent of tariff 50% is quite high. However, to mitigate the problem, what is the problem? Problem is we were dependent a lot on America for our growth and future. And we have now understood that, that was not a sound way forward. And so we have already entered U.K., but we will now like to strengthen the U.K. market. And for that, we have -- we are acquiring another small company having 3, 4 people, Penstocks U.K. Limited. The biggest advantage of that company is it is located in Midlands, very near to our main clients. And it has got already prequalified with 1 or 2 framework agreements. And as a result of that, we think in time to come, we can leverage their strength and make Waterfront a pan U.K. company with good revenues. In the same spirit, we are acquiring WesTech. WesTech brings to us a new market, which is the industrial process equipment business. WesTech has very strong technology. The industrial process equipment business in hand of WesTech was around INR 55 crores last year. However, we expect when it comes in our hands, we would be able to push it aggressively because the controls would be relaxed. The controls were earlier from U.S. and they were very stringent. However, we will have better monitoring and better controls from India. And as a result of that, we expect the complete process equipment business from Jash to get a flip and it becomes a big revenue earner for the company. In the end, I would like to say let's not get brought down by results in the first 6 months. Sometimes it has always been tricky in the first 6 months. However, we should be clear about our vision and what is our vision? Our vision is that we should have a diversified product portfolio, we should have diversified market and we should be in a position to cater to things which not every other manufacturer can do. And for that, we are building up capacity, capability. And with that new capacity and capability which we are building up in our plant, we should be able to be firm on our targeted revenue milestone of INR 1,000 crores by FY '27. With that, I would now like to go on to the financial figures. So on the total revenue front, we have had 12% year-on-year growth. On the gross profit and margin, though we have had growth, but the margins as a percentage have come down. EBITDA, profit before tax and profit after tax all have been hit hard because of the factors which I have already stated before. On the stand-alone performance, the revenue of Jash Engineering has come down. It is because in comparison to last year, around INR 20 crores, INR 25 crores revenue of America is lower because of our not dispatching the material due to the tariff implication. Shivpad revenue is slightly up. Rodney Hunt revenue is overall [Technical Difficulty]. Waterfront revenue is up. I believe the PAT before tax, after tax and all things, though they are down now, but as we go forward in the second half, we will see marked improvement in all these figures. This shows the revenue composition of the products which we make. Water control gates still is the biggest product contributor, followed by screens, valves and other equipments. As you can see in the first half, our Indian business has been more and -- followed by U.S. and then other markets. In time to come, as I said, I want U.K., which is within Europe and Africa to grow more stronger and have something like 35% Indian business, 30% U.S., 15% from Europe and 15% to 20% from rest of the world. Once we do that, then we'll not be dependent on any one single market in a big manner as we are today. Shows the consolidated income statement quarter-wise as well as for H1 of '25 and as all of '26. As I already stated in the beginning, whatever we see, we will see a big improvement when the revenue goes to INR 825 crores levels at the end of the year. The consolidated balance sheet. Next. As you can see, our order book trend is improving year-on-year. We expect this year also to have a very good order book position so that we have a very strong next financial year. We are quite confident in spite of whatever Trump tariff has come in, we are quite confident that our growth, though this year is subdued, but we will be on the right path with these new acquisitions and new business strategies, we will be in the right path in future. One point I would like to highlight here is there is some good news on the tariff front also. Our lawyers in U.S.A. have concluded that on the cast iron products, there cannot be any duty. So our cast iron gate business, which was going from India to America, there would be no duty on that. However, this is their conclusion based on 2, 3 months of study. It will still take some time to verify and get it approved. Once it happens, then as far as cast iron gates is concerned, we are back on track for the American market. However, we have paid tariffs on cast iron gates also because there was no clarity. We can claim it back. But all this is subjective to so many things. So I'm just telling here that what is the situation -- current situation, the current situation is we do not have to really pay a tariff on cast iron gates. And whatever we had paid in last few months, we can claim back. However, this is still an issue of legal and discussion with the custom authorities in America. Next. Our consolidated order book, as I have already shown before, is INR 890 crores. You can see all the companies have a strong order book. Waterfront included, we have revived, which is also doing good. Rodney Hunt is also having a very strong order book position. This is in spite of our slowing down on taking the orders because of uncertainty of tariff. So I would say coming -- going forward in the next year, we will again be on the track. Next. Our pipeline every year -- every month, sorry, has been between -- varying between INR 40 crores to INR 70 crores and odd. And we are quite confident that we will carry this forward as well. This is the sales outlook, which we had given in the beginning of the year, INR 860 crores. As I said, I'm now not that confident of achieving INR 860 crores. We feel INR 825 crores should be okay. In case of INR 825 crores, we have not included the additional revenue, which will come from the acquisition of WesTech as well as from Penstocks U.K. Both these are expected to happen sometime in December or January. If it happens in December or January, we will be able to add certain contribution from there based on which we may touch INR 840 crores, INR 850 crores. But as of today, I think INR 825 crores is what we are targeting. If we can do better than that, it all depends upon how soon the tariff issue with India is resolved between U.S. and India. I would like to brief regarding what's happening in the company. We commenced the production in Chennai. We are putting up a team in place. I think next few months will be spent putting the right team in place. And from April '26 onwards, this plant would be able to contribute fully once the team is in place. Also, this company -- most of the approvals from NCLT has come. Now it is only procedurally some issues are left, and it is not because of us, but because of NCLT bank not being established. So we expect by January '26, the merging of Shivpad will just to be completed. As far as WesTech is concerned, the due diligence is over. SHA discussions are going on. And if everything goes right, we expect to complete the acquisition by December '25. Regarding Penstocks, Penstocks U.K. will be purchased by Waterfront U.K. so that we have only one subsidiary in U.K. Subsequently, we'll be merging Waterfront and Penstocks U.K. The initial agreement has been signed. Signing of the agreement was delayed because of medical reasons of the promoters of that company. Now they have joined the company, and we expect the due diligence to be done within November and acquisition to be completed by December. Company has been investing at all its plant. In Unit 1, Unit 2 and Unit 3 together, we are going to invest close to INR 60 crores, INR 70 crores in this year so that we have capacity in-house for production and achieve revenue of INR 1,000 crores. Similarly, we have planned 2 expansions in America, one at Houston plant, for which major drawing work is over. Drawing work for plumbing, et cetera, is going on. We expect to submit all for final approval of the city in January. And generally, the approvals are received within 2 months. So we should be in a position to start the construction activities by April, May and commission the plant by March '27. As far as Orange plant is concerned, we are working on the new layout. And once the new layout is decided, then we'll be freezing the budget. And once the budget is freezed, thereafter, we'll decide how to fund and how to go forward. However, I would also like to add here that in addition to this capital expansion, we are also planning to invest in a new plant in Saudi Arabia. This is still on the paper, but the decision has been taken. So we would be opening up a company in Saudi Arabia to target the markets of Middle East. And we hope to establish this company by 2027, mid of 2027. New product development, we develop new products every year. The target is to have 5 to 6 new products being developed every year. This year, we have worked on the high-pressure Knife Gate Valve that is for the Canadian oil sands market. And we expect to have good output from this product. We also developed HDPE Knife Gate valves for chemical industries and Motorized Swing Gate Valve for high-temperature application. All these products keep on adding to our product kitty to give us an edge over our competitors. This shows some of the few prestigious projects which we have done this year in the first half. We have a very big job from Singapore for Knife Gate Valves. You can see these are huge Knife Gate Valves, which we are supplying. And it is one of the biggest order in the world for Knife Gate Valve. The delivery has started, and we expect to complete the whole project by end of this year. The same specialized valve was produced for IOCL Panipat and this valve has been supplied now. And if they are satisfied with the installation and application, then we expect further business to come from IOCL. We are also going very strong now on the air vessel business, and we are getting one job after another, every job are quite challenging. And we hope that in time to come, we would be a very strong supplier on the water vessel -- air vessel business in India. With that, I would like to say thank you. I have covered -- tried to cover most of the points which we have covered in H1 of the year. And now I should be able to answer -- questions from you.

[Operator Instructions] We'll take a first question from [ Kunal from Sunidhi ].

Great job on the transparency end where Jash has -- every quarter, even though the macro scenario has been tough, Jash has always guided the investors very appropriately. My first question is, sir, on the -- are we holding back on some order dispatch because of tariff? Are we anticipating that maybe will the tariff be reversed to 15%?

We tried in the beginning. Now we are fed up and we are sending the material because we cannot delay it too much. The clients are waiting for it. So now we have to take a [indiscernible] and absorb the losses and send the material.

Okay. So we are not holding back. We are -- whatever is there, we are trying to fulfill the orders and pay the tariff.

Yes. In the beginning, we were holding, but now last 1 month, we have started dispatches.

Okay, sir. Sir, how much would be the order book of WesTech India tentative or we do not have any idea on that?

We have all ideas. We are acquiring a company. We definitely have the idea.

Can we disclose that is what actually I was trying to...

I would not like to disclose until the acquisition is over.

Okay. And sir, acquisition is of tentative what amount? I think last time we spoke was about INR 30 crores or INR 25 crores, INR 30 crores.

Something like that, yes.

And they -- are there any assets that are there? Or is it basically the technology that we are acquiring from them?

Technology.

And sir, one last question. There was this -- Welspun had won this 900 MLD order of water treatment in Mumbai. Any update on that? Have we received any orders from there? Or are we trying to get any?

We are already doing 4 orders with Welspun for various projects. This is still under design stage. So when this comes up, we will always be considered.

We'll take a next question from Navin from [indiscernible].

Sir, with respect to the U.K. market, we had acquired Waterfront and now proposed acquisition of Penstocks. With this both, there are around 11 companies which operate in U.K. market, water market. So what will be the -- out of the proposed capital spend, how much will this -- both acquisitions contribute to? Will we be able to cover the entire U.K. market?

See, Navinji, [Foreign Language] the reason we went was to be into Midlands, right? Waterfront was being considered as a Scottish company. Now with acquisition when it is over, with the acquisition of Penstocks U.K., we'll have a small setup, 3 to 4 people set up in Midlands, giving more confidence to the client that these people can service fast because today, we are 8 hours away from Midlands. So that changes the perception that we are not a Scottish company, but we are a British or U.K. company or England company, okay? So that was one of the reasons. The another reason was also that they had some framework agreement, they are approved by Indian Water. That framework is going to come to an end. But you have edge over others because you are already in the framework. So there are so many -- they had some proprietary designs also, which are very good, allowing to make gates very fast. So considering all these things, we had acquired Penstocks U.K. The investment amount is not huge. And the funds required for acquisition has already been transferred to Waterfront.

So will you be sort of starting the process of registering our products with the other companies?

No, they have already registered. What we are -- see, if you see what was Waterfront before Jash entered was there was not a proper marketing team. It was based on whatever business comes. Now we have put a proper marketing team. We are going to countries around U.K. We are going to Ireland. We are going to other countries. And we are trying to bring up their profile. We have now 2 marketing people. One person has just been appointed who will be joining in South of England. One person is already there in Midlands. The new company we have acquired also in Midlands. So slowly, slowly, we are spreading means for Waterfront. Our target is very clear. It is painful in the beginning because we have to add on people and the cost of people is high. The output comes later. But our target is very clear. We'd like to take Waterfront to 10 million or 12 million revenue in 4 years' time.

Sir, my second question is, are we started getting any orders under BABA Act? If not, when do you see the orders coming in?

Where?

BABA Act U.S. Rodney Hunt, BABA Act.

BABA, B-A-B-A.

BABA is not an issue. We are already getting orders for that. BABA is very old. It's not new. We have been taking orders against BABA for last 3, 4 years now.

We were expanding our capacity in anticipation of larger orders. So...

That until you really expand and add people, we are adding people. Now we have 75 people in America. So we are adding people in production, et cetera. But it is a slow process. Until we make up the plant in Houston, I don't think that we would be going very aggressive on BABA. Whatever [indiscernible] we are taking, but we need production people in America, and we don't have enough.

Final question is, how is the demand outlook looking? You had commented in your initial comments, but has the whole decision-making slowed down? Or do you think things...

It has slowed down. See, if you see, every country is troubled by the tariff. No one is safe from it. And so everyone is reevaluating their decision on how to go for capital investments, what to invest, what not to invest. And so there is a perceptible slowdown in decision-making. However, I think that in the next few months, all these tariff issues should get resolved. The problem is not tariff. The problem is uncertainty. No one knows what will happen tomorrow. And so this uncertainty is not allowing people to take decision and move forward. I believe this -- even the American government should understand that this will not help anyone. And maybe in time to come, they will have a consistent policy on tariffs.

We'll take a next question from Sahil Doshi from Thinqwise.

Just firstly, related to your gross margin commentary in your opening remarks, you spoke about 2 impacts, one being screw generator projects orders. So could you quantify what's the quantum of this? And is this related to the NPCIL order, which was also...

No. This was an order for other projects. This is renewable energy, it's not NPCIL. And the screw generator, it was a design issue. The design -- the estimation was done 4x and the design when the design was -- final design was done, it was 1.5x. So it was a design issue and nothing to do with NPCIL.

Sure, sir. What would be the quantum of this order, sir? Just to understand.

Around INR 7 crores, INR 8 crores.

Sure, sir. Understood. And sir, in the past also, meaning last 2 quarters also, we had seen an impact on gross margins. And part of it was alluded to this NPCIL and part to the large order in U.S. So are those -- yes, sir, are those over or the impact of those are yet to be coming through?

Kansas is still under execution. NPCIL, the order in which we are -- we were losing money is nearly over. And the new orders which have come are...

Understood, sir. Sure. So sir, just taking this discussion forward in terms of gross margin now that the current order book in the U.S. as well as the existing orders which we have, how should we think about the scenario incrementally, the aspiration of 60% kind of margin which we generally have on gross profit -- this thing, would that yet come back in a couple of quarters? Or how should we think?

See, let us be clear. In this year, we will be stretched. When I say this year means financial '26. The reason for that is that the tariff will put a big hit. Tariff not only will put a hit here, but in America also on account of tariff, costs have gone up, all expenses have gone up. So as a result of that, the American operations also will suffer and the exports from India to America also will suffer on the margin front. However, this will happen only on the orders which we already had in the hand. The new orders, we are already putting the factor of tariff and quoting and getting orders. So this will happen only for the old order book. Until that order book is not clear or until tariff is not reduced, margin would be affected. And I think we have given a guidance that the margin at a level of INR 860 crores, we are expecting around INR 80 crores as PAT because of reduction from INR 100 crores to INR 80 crores because of all these tariff issues.

Sure, sir. That helps. Sir, just on the U.K. front, I think I was referring to the May '24 call when we had possibly spoken about Waterfront. We were expecting 200 to 300 basis point improvement in margin every year, which actually hasn't really played out. So...

It will play out. We cannot take a call based on 6-month or quarterly performance, right? See, as I said, our type of business is fixed cost. Fixed costs are there throughout the year. 12 months, the same fixed cost will be there. Some incremental would be there, but generally, fixed costs will be there. However, the revenue spike happens in the third and fourth quarter. So when the revenue spike happens, all those fixed costs as a percentage goes down. And on the variable side, the margin starts improving. So I am quite confident that when we go to the end of the year, even at Waterfront, we would be hoping to breakeven. Last year, we were in loss. This year, we'll breakeven. And as a result, it will be an improvement in performance.

Sure. No, my question was more actually, if you can talk about last 1, 1.5 years, what have been the learnings in Waterfront and U.K. market? And is there any change in your strategy or thought in terms of the potential in terms of revenue opportunity as well as margins?

No. The change in strategies, acquisition of Penstocks U.K. has been understanding the market, understanding what was our limitation, how we were perceived to be a Scottish company, et cetera. So once you go in, once you acquire a company, the story starts, it never ends there. So our story has just started, and we are learning from it, and we are making changes every quarter based on what we are learning. As I had said before, there is a potential -- U.K. potential market for our products is more than GBP 25 million, GBP 30 million. We are still young. This year, we are targeting 4 million. So we are still young for that market. But in time to come, we would be becoming a dominant player in the U.K. water control gates business.

Sure, sir. And just wanted to check on Saudi, sir, with the -- you have finalized the plant there. Could you just talk about the landscape of opportunity? What is the peer set there? And why do you require to set up a plant versus build in India and sell?

Everywhere, whether it is India or America or Saudi, it is -- everyone is asking to build the product in their country. Now Saudi is a big country. Today, if you are not producing in Saudi, the chance of you getting order gets reduced drastically. It's a very big market. They are investing $100 billion in their cities and putting up new cities and things like that. If we have -- if you want to take part of that cake, you will have to be in Saudi. I would say strategically, we are 2 years late. Anyway, whenever you wake up, you have to act. We have broken up now, and we would like to go into Saudi next year and try to set up a base to address the Middle East market from there. Also understand one thing, whether it is U.K., America or Saudi, long gestation period orders will be done from India only. It is the short gestation period orders. It is certain specific to comply with the legal requirement would be done there other than that would be done from India.

Sure, sir. In terms of our competitive strength and what would our USP be? Because what we understand from a few players that the working capital and the cycle times in Saudi are very long. So would that comply with your stringent requirements in general?

See, we do not -- we are not setting up a huge plant, first of all, understand. Our investment in Saudi is going to be very small. And we have to cater to the business, then we have to comply with whatever terms are going to be there. So I would say let us go in, let us realize what the market is because we have some orders, but those are small orders. Let us realize what the market is. And on those small orders, we have no problem. We are getting LCL payments. So it's not an issue. Your experience, I don't know concerns which type of industry or product. We have had no such issues about getting payments and working capital and things like that. So let's see. However, what I can assure you is we are talking of investment of few million dollars, $2 million, $3 million, $4 million, not much.

[Operator Instructions] I will take the next question from Sahil (sic) [Salil] Desai from Marcellus.

Pratik bhai, the first question is if these low margin or negative margin orders. Now this is the third time we're hearing of order with some problem has occurred. So anything or any steps you're taking that in the future, maybe there is some protection here, some risk management strategies?

Salil bhai, it is like this. We are in the custom engineered products. Out of INR 800 crore revenue, it may always happen that on INR 30 crores, INR 40 crore projects, we may have made a mistake. Every time we make a mistake, we try to learn from it and ensure that we don't make a mistake. But as the company is growing, sometimes decisions happen in which people go by their confidence and at a later date, it is put that they were wrong. We try to correct as much as possible. But to expect a custom-built manufacturing company to make zero mistakes means we are talking of very high-quality people at all level of organization. And so I would say we try to correct ourselves wherever possible. Let me cite the examples. We booked up big time in Kansas. In Kansas, we booked up because initially, we thought we'll make Kansas in India. Then we were said, no, it has to be made in America. So we agreed to make it in America, but we had no team in America to make such a huge job. Okay. So our logic that we will be able to ship the production to India did not come true. So we took a hit there. About this true, this was a very big true, not that we have not made such big true, but on the design aspects, we had thought we will do something and we'll escape. We could not do that or we overdesigned, overengineered the product. I believe it is more of an overengineering what we have done to make it safe and strong. It was not required, but a decision was taken by the design team that no, no, this is required and we have done it. Today, we realize that it should not have been done. So steps are being taken in future whenever such critical jobs are there, more review so that we do not invest additional to what has been estimated. NPCIL where we lost a lot of money. It was a strategic gamble. You must be reading in the newspaper, in India, a lot of nuclear power projects are going to come. But we wanted an entry into that. Today, NPCIL, top bosses of NPCIL consider Jash as one of the best vendors. This is what we have gained by losing INR 7 crores, INR 8 crores. So everything was sometimes it is a mistake, sometimes it was a strategic decision. No company likes to lose money. But as I said, in INR 800 crore revenue, INR 20 crores, INR 30 crores projects would come where we may take a risk, calculative gamble and go ahead and sometimes face trouble. However, if those 2 or 3 jobs come in the same quarter, then it hurts the quarter. But on the annualized basis, it will not hurt us much.

Understood, sir. Sir, second is on this -- the tariff uncertainty making business difficult around the world. So this Vietnam order, just to understand this right, a large INR 10 crore order, I mean why would Vietnam not take delivery for something that's happening in the U.S. If you can just explain that a little more, please?

I do not know why they are not going for funding from World Bank. But World Bank is controlled by America, okay? And Vietnam has been put -- high tariffs has been put on Vietnam also. What I know is 65% of the payment has been made to us. But they are still asking us not to deliver the material because the project has slowed down. And this, we are seeing globally that uncertainty because of XYZ reason has resulted into slowing down of projects and people -- because the fund flow has become tight, people are not taking delivery, et cetera, et cetera.

Right, sir. All right. So next is on the Saudi plant. Now in the last 4, 5 years, we have grown rapidly. There have been multiple additions in terms of acquisitions. Organically, you have added capacity in India. Is there a time, let's say, in the next 3, 4 years where you think that now we are set, we are everywhere we want to be and maybe just utilize these capacities better? Or growth will come more by acquisitions than by what we already have on hand?

Growth will not come only by acquisition. Growth has to come by what is your key strength. Your key strength is manufacturing and the product knowledge you already have. But acquisition, why does the company do acquisition? I said, we have given rationale for each and every acquisition. It is not all my whims and fancies that we have acquired a company. We have acquired company to strengthen our position in particular markets or particular products or expand the range of equipment. So this we do where we feel there is a right fit and right pricing. Understand we are acquiring WesTech at a multiple of 7. I would say this is a very attractive acquisition opportunity. New product range, strengthen our complete process equipment business, gives us huge export potential and at a very low margin -- at a very low pricing with keeping my new plant in Chennai busy. So this is a win-win for everyone, and why should we not do it. So all these decisions are taken after a lot of careful thinking. And when any such lucrative opportunity comes, you cannot say that I decided never to acquire a company and so I will not do it. That's not our policy. We are having an open mind. If a fit is there, if an advantage is there, if it helps the company in future to grow or to add a product range, we will do it. But I would say, today, for us, capital expansion is more critical because with all this acquisition, we have to built up our capacity to deliver, and that is what we are doing in next 2 years.

I see. All right. And sir, lastly, on the revised guidance that you gave. So on the profit number, you're saying you would be between INR 75 crores, INR 80 crores. Is that understanding right?

That's what I believe. My perfection would be coming only by January, February. But I think that is what we should be able to do. You all who are here are all people who are financial wizards, okay? So what you can do is you can go on to my first year results, remove the fixed cost and then multiply by 1.8 the variable cost, and you will be able to see how much profit can come out.

We will take our next question from [Dilip Sahoo].

My question is, we are planning to do, say, INR 1,000 crores next year. There are a lot of surprises, bad lucks and headwinds that has happened this year. Hopefully, next year is better. But assuming that we do around INR 600 crores, INR 650 crores outside U.S. because we don't know what will happen with tariff yet and let it be in enigma. So that INR 650 crores, can we do at our standard 22% operating margin, 12% PAT? Is that an assumption we can make?

Yes, we can do it -- except on Waterfront.

Yes. I'm saying non-U.S. globally as a whole, we can look at INR 650 crores with, say, 12% -- 22% operating margin, 12% PAT margin business. That won't have any surprises, right?

That should not have any surprises. See, [Foreign Language] Mr. Trump is a surprise which I never bargain for.